Are CEOS Really Paid Like Bureaucrats?

Posted: 13 Aug 1998

See all articles by Brian J. Hall

Brian J. Hall

NOM Unit Head, Harvard Business School; National Bureau of Economic Research (NBER)

Jeffrey B. Liebman

Harvard University - Harvard Kennedy School (HKS); National Bureau of Economic Research (NBER)

Multiple version iconThere are 3 versions of this paper

Date Written: 1997

Abstract

A common view is that there is little correlation between firm performance and CEO pay. Using a new 15-year panel data set of CEOs in the largest publicly traded U.S. companies, we document a strong relationship between firm performance and CEO compensation. This relationship is generated almost entirely by changes in the value of CEO holdings of stock and stock options. In addition, we show that both the level of CEO compensation and the sensitivity of compensation to firm performance have risen dramatically since 1980, largely because of increases in stock option grants.

JEL Classification: G3, J3, L2

Suggested Citation

Hall, Brian and Liebman, Jeffrey B., Are CEOS Really Paid Like Bureaucrats? (1997). The Quarterly Journal of Economics, August 1998. Available at SSRN: https://ssrn.com/abstract=103128

Brian Hall (Contact Author)

NOM Unit Head, Harvard Business School ( email )

Soldiers Field
Boston, MA 02163
United States
617-495-5062 (Phone)
617-496-4191 (Fax)

HOME PAGE: http://www.people.hbs.edu/bhall/

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Jeffrey B. Liebman

Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
United States
617-495-8518 (Phone)
617-496-9053 (Fax)

HOME PAGE: http://www.jeffreyliebman.com

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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